Wagner James Au reports on virtual worlds & VR

Wednesday, March 14, 2018

Three Points John Oliver Should Make in His Next Cryptocurrency Segment

This is of course a hilarious and wild ride through the euphoria that is crypotcurrency and blockchain, though my strong sense is John Oliver and team decided to pull their punches -- to the point where most Redditors in the very Bitcoin subreddit he mentions in the segment don't seem to be re-considering their life choices. This being among the top-upvoted comments in a thread on the segment:

This was a good piece. It said the benefits. Said how it is basically gambling and a speculative place. Basically, do you research and don't just jump on the bandwagon. Only invest what you can afford to lose and realize that there is a lot of unregulated bullshit and scams you have to be careful of.

This is all true... but only scratches the surface of the problems inherent in Bitcoin/blockchain. On the off chance Oliver's researchers are lucky enough to read this post like you are, here's three points they should consider adding in the inevitable follow-up segment:

The inherent self-interested nature of cryptocurrency hype: The people with the most motivation to promote/overhype cryptocurrency are people who've already invested in and own cryptocurrency. Because whether they acknowledge it to themselves or not, they need others to get into the cryptocurrency market -- so they'll have new buyers willing to spend real money on the cryptocurrency they themselves own, and are inherently hoping to offload at a much higher price than they paid for it.

The environmental disaster inherent in Bitcoin and many other cryptocurrencies: Really surprised Oliver didn't point this out, since after all, Bitcoin miners are creating a carbon footprint already larger than every Trump supporter driving a giant SUV.

Blockchain is a customer support nightmare

For most consumers, losing a password to an online service is a mild inconvenience they’ve grown accustomed to, since typically, it’s quickly fixed by requesting an email reset, say, or talking with customer service.

Blockchain wallets and their passwords, by contrast, are tied to a file on a user’s hard disk and are absolutely critical to users trying to access the blockchain. By their very nature they have no recovery mechanism. “You lose your password, you lose everything” is an awful user experience for mainstream consumers and a nightmare for companies attempting to build their service on a blockchain. If you use a hosted service, the riskoftheftorsuddenlossofassets is very real, with central targets and limited traceability.

Let’s say you’re trying to run an online game or other consumer service where purchases are made on the blockchain. How do you handle refund requests? How do you even verify a loss? How do you handle theft or purchases financed with stolen cards? A company could, of course, create a blockchain master override with a recovery protocol, but that would totally defeat the purpose of using a system that’s supposed to be decentralized.